The Most Pivotal Factors Affecting CRM Success or Failure

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By Alison Diana

Knowing where to focus when installing customer relationship management software

On the flip side of its ability to provide return on investment from enhanced marketing campaigns, increased sales and improved customer service, customer relationship management software does have the potential for several points of failure.

But careful management and a well-considered pre-implementation strategy can counter many of these concerns, according to experts. Taking the time to get input from all involved departments on must-haves and desired features, on workflow and procedures, as well as discussing and, if possible, viewing prospective vendors' clients using the CRM application under consideration is time well spent. It's natural to want an immediate ROI on your company's CRM investment, but slowly and methodically rolling out the new application will save headaches, employee buy-in and money.

Businesses should not view CRM as the way to resolve their problems. Rather, executives can use their decision to invest in CRM software as the opportunity to rethink older objectives, strategies and supporting business processes. As they look over all the application software, they should determine whether their companies could benefit from new approaches to old scenarios.

A decade ago, CRM earned a bad reputation when Gartner reported that 50% to 70% of CRM software installations failed. In 2009, there was a 47% fail-rate in CRM implementations, according to Forrester. Drilling deeper, though, only a few factors cause most CRM software failures. Avoid these, and your CRM success rate increases.

Many businesses must be benefiting from Customer Relationship Management: After all, worldwide CRM spending for 2010 was estimated to be $11 billion, according to Forrester.

Technology Choices

Choices in CRM software technology can have far reaching implications, which if not proactively addressed may not be recognized until an implementation is underway. There are many CRM application and technology options, such as commercial or open source CRM, vertical market or horizontal business applications, and on-premise or on-demand / software as a service CRM systems with their remote management and subscription pricing models. These choices must often be made within the realm of prior IT investments and the context of the existing IT environment. In many instances, a department or business unit may already have purchased a CRM application independent of the rest of the organization, and any new applications must sync with the infrastructure in place.

Software integration is a top success factor when purchasing a new CRM system. It is key to ensure that all applications which share business process workflows or shared data can be easily integrated, that data is not siloed or isolated, and that data is updated simultaneously across programs. For those reasons, it often makes more sense to standardize on a single CRM software system rather than deal with multiple applications from different vendors.

Executive Leadership

Like any large-scale enterprise software initiative, a CRM implementation requires a leader, not a figurehead but someone who enthusiastically embraces the concept and reality of the tool and strongly advocates for its use across the entire organization. This should be a top-level executive who can be counted on to commit resources and garner widespread support across both C-level members and operational management.

Without visible top-level support, your CRM installation easily could flounder. While it may well get funding, the length of time typically required, the scope of the project and the level of departmental involvement mean the project could lose some of its star appeal at times, making a strong top-level proponent a must-have for success.

"CRM implementation projects are notorious for going over budget and over time. I think that often it is because not all stakeholders in the process fully understand how much the corporate culture and day-to-day operations can be affected by the system. If those issues are addressed early and completely, it will make a big difference in the success of the CRM implementation," said Jon Christensen, president and founder of Antioxidant Alley.

Departmental Buy-In

Unlike many other business software applications, employees across many departments—marketing, service, sales, and business development, for example—will use CRM. And each department will bring its own requirements and culture to its list of software demands.

Frustrating as it may sometimes appear, it's vital that all departments are well-represented and involved during the pre-purchase evaluation phase. After all, no one knows what sales wants more than the sales manager or vice president of sales. The same holds true for marketing, customer service, IT and even human resources. Without these professionals' relevant input, your company may not buy the best CRM solution, ignoring necessary features in CRM systems because they are not used by the better represented departments.

And when roll-out time arrives, snubbed employees—while forced to use the program—can make the deployment project very challenging for harried project managers, IT professionals and your software partner in terms of training, support, adoption and any custom programming you may request. If users don't see benefits, they can and often will put up barriers and avoid the system as much as possible.

"Our analysis concludes that corporations can only achieve benefits from CRM software if end-users see an application as a blessing rather than a curse," said Joanie Rufo, research director of customer management strategies at AMR Research, in a statement.

Big Picture

Sometimes software vendors are guilty of hyping their products and over-promising the software's capabilities. Seeing the customer management software in action, self trialing the application and speaking to existing customers are the three best ways to combat marketing-speak, advertising lingo and inflated expectations.

At other times, customers haven't taken the time to fully understand their operation and their company's future plans. Knowing where you plan to be in a year or three years is important: You don't want to buy software from a developer that specializes in small companies if your company is on-track to expand dramatically. If your business expects to add branches in Latin America, you'll want software with Spanish and Portuguese versions, whereas a company with offices in Italy wants an application that can handle Euros, different time zones, and Italian. Properly identifying your requirements in an objective, prioritized and measurable fashion is a pre-requisite to identifying the optimal CRM system for your business.

Measurable Return

What gets measured gets done. Once the customer management system's (finally) in place, organizations must have assigned resources and methodologies to measure their progress and ROI. Previously measured baseline metrics should have been recorded for both important and routine business processes. Going forward, ROI measurement should be performed on a periodic basis, often quarterly, in order to learn what's working, what's not working and implement remediation measures where necessary in order to maximize software technology payback.

A decade ago, CRM earned a bad reputation when Gartner reported that 50% to 70% of CRM installations failed. In 2009, there was a 47% fail-rate in CRM implementations, according to Forrester. Drilling deeper, though, only a few factors cause most CRM failures. Avoid these, and your CRM success rate increases.